Yum China Shares jump on better-than-expected Earnings

Yum China Holdings, Inc. (NYSE: YUMC) Wednesday reported quarterly earnings that beat analysts’ estimate, boosted by robust sales at its KFC and Pizza Hut chain.

The operator of KFC, Pizza Hut and Taco Bell in China said same-store sales, a key metric for investors evaluating the chain’s future performance, rose 1 percent in the first quarter, beating analyst forecasts of a 0.7 percent decline, according to researcher Consensus Metrix. Pizza Hut’s same-store sales rose 2 percent in the period, while KFC-branded stores climbed 1 percent.

"We are especially gratified with the progress made on two key drivers of growth – Digital and Delivery," Chief Executive Micky Pant said in a statement. "We believe we have unprecedented insights into consumer behavior and have been engaging with them across the digital eco-system: from pre-order to payment."

Yum China is the Chinese operation of Yum! Brand Inc. Investors are expecting that its spinoff from Yum Brands will create more value for the shareholders. The strong start shows that Yum China’s business model has growth potential.

The Chinese restaurant chain now has more than 7,600 existing stores in the country. The company plans to add 550 to 600 restaurants in 2017.

Yum China shares jump 11.5 percent to $31.45 in the early trading in New York.

"We are examining cash deployment opportunities right across the spectrum from growing our core business, to growing beyond our core and finally returning excess cash to shareholders," Pant said.

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